The following Events must take place
1. Break up the old feudal land holding:
in otl the government took forever to do this. This held back agricultural development. The reason was indian republic is a federal system, agriculture is a state jurisdiction. Anyway if the federal government intervene and does the job of breaking up the feudal lands( the Constitution does allow the federal government to do so with consent of States, of course) you'd get a class of independent peasant Proprietor, many of whom would innovate with agricultural practices to earn profit which has and is happening even now. The benefit? Food self sufficient economy, agricultural exports to earn foreign exchange, richer farmers meaning better consumer and more investment.
2. Agricultural development remains top priority:
Though this is true to some extent even in our time line but the commitment wax and waned from time to time. The priority of the government should have been on encouraging or building irrigation system, power generation and distribution, agricultural extension services, pesticides and chemical fertilizers, providing transportation infrastructure to the villages. The government both at the federal and state level used to concentrate on building heavy industry that had little to do with agricultural development but more to do with ideas relating to rapid industrialization like that of USSR which most Indian elites were fascinated by.
A well off Peasantry is a bulwark against socialism and communism thus freeing the peasantry from it feudal obligation combined with massive investment in modernization of agriculture would turn them into loyal citizens of the republic.
3. No license raj or the draconian laws on foreign trade.
This is a given. The industrial regulations development act, 1951 did far more damage to the development of the country than any other laws. The foreign exchange regulation act, 1973 is a close second. Both these laws basically made private enterprise an extension of the state. From paying salary to the management to capital expansion had to get approval of the government. This introduced corrupt and nepotism on a industry scale in the government the consequences which Indians like me are still living with.
The laws on foreign exchange prevented small or large enterprise to obtain machinery or equipment from abroad because the government put so many restrictions on the availability of foreign exchange. Which this did kill off the infant computer manufacturing industry in India what it did give birth to was smuggling of goods such as radio television etc which made the participants of the shadow economy rich. Most of the members of the Indian underworld had begun their careers as Smugglers of consumer electronics.
Do away with these laws, you'd have a cleaner government, more economic development and less crime.
4. The Indian National congress adopts Roosevelt's new deal style economics rather than aspects of soviet socialism:
This too is within the realm of possibility. If this was the governing ideology of the Congress party expect a government strong on welfare and keynesian theory which was kinda the norm back then. However expect a change in the 70s as the shortcomings of the model is exposed and you may find Indian policymakers drawn to social market economy of West Germany.
5. Government encourages small and light industry:
Logic of economic development would dictate that a country should secure it food production and then move on to develop it's small and light industry and gradually move on to build it's capital intensive heavy industry base.
The exact opposite happened in india. In the mid 1950s to the mid 1960 s government concentrated all it's efforts on heavy industry at the expense of agriculture and light industry causing the economy to overheat which caused stagnation of the economy in the 1970s. The plan in otl was based off the ideas of Prashant Chandra mahabonis who took inspiration from the heavy industrialization of the USSR
The country instead should concentrate on manufacturing low tech goods and assembling components for goods in the initial phase as they don't require much in the way of capital or skilled workforce and later as capital accumulation takes place and skilled workers are available a more mid level to high tech industry and capital intensive industry may be set up.
Doesn't make much sense to have high tech industry in the 50s or 60s when you can't feed your population, that was what the problem was in our time line too much emphasis on high tech capital intensive industry when the economy could not sustain it.
6. Sensible nationalization program and government tutelage of the financial sector:
Nationalization of some aspects of the economy particularly the financial sector in the context of India is good in a way but the establishment of government monopoly is not.
This does not mean a government monopoly of the sector but a sector in which government plays an important role. What this doesn't entail is establishment government monopoly of airlines, mining, coal, electricity, railway etc. All sectors of the Economy are open to private participation but in certain sectors like chemicals, electricity distribution and transmission for example the government companies play a more important role.
Instead of taking over existing company the government should rather set up new companies to meet the demand of market and when private sector is able to mobilize capital to meet market demands the government should consider privatization of those enterprise.
The role is more important in the country's financial sector which at the time of independence was very modest. It would require a significant amount of government tutelage for the sector to emerge and play the role that it is meant to do in the economy. The reason being the people of India at the time and still do now, have a lot of faith in the credit worthiness of the Government which breeds trust and as we all know the most important commodity in the financial sector is trust, so a more market oriented India would still be dominated by the government albeit behind the scenes.
7. Take over entire territory of Jammu and Kashmir.
The region of Kashmir and Ladakh is the point of friction for India with it's neighbors. This would have been entirely avoidable had the Indian forces in 1948 proceeded to take over the entire territory rather than adhere to UN mandated cease fire. The cease fire put the Indian military in a position to defend locations that are just impossible for example Kargil. This had resulted in the country spending billions of dollars on military infrastructure and equipment which would have spent on agriculture and infrastructure.
lastly as a bonus the Chinese and the Pakistani nations would not have become actual neighbors and the threat of India being surrounded on all sides by hostile neighbors is far less in this time line as the geography strongly favors the Indian military.
8. Good relations with the western world in general and USA in particular
This is almost a given. India didn't have good relations with the united states during the cold war. This foreign policy was almost a shot in foot since the western world through out the cold war era had more then half of the world's economic output and by not being on the good books of these countries India lost market access and also investment and technology access. Good relation with the west would ensure that during the seventies and the eighties as the US and western European economy was transitioning to a more high tech and high income economies the country would benefit from investment and the outsourcing of industry and services.
9. Good relations with neighbors particularly Pakistan
While many in this forum often bring up a rosy picture of a united subcontinent, its honestly not possible. What is possible is India and Pakistan having better relation than in our time line, closer economic and trade ties is definitely possible and close co-operation between military during the cold war era is also another possibility. The turning point in the relationship came not in 1948 or 1947 but the 1965 war in which the war ended inconclusive on the tactical front while a strategic win for the Indian side. This caused widespread panic amongst the Pakistani elites as they saw India now as a existential threat as a blow on India when it was at its weakest didn't result in any strategic gains. In the mid 1950s the Pakistani at the instance of the Americans offered India an alliance against China which India declined as India was concerned with improving ties with the soviet union and china. Had the offer been accepted would have caused one of the biggest geo political earthquake of the cold war era as the Chinese would feel encirclement by the capitalist forces which would force them to have closer ties with Moscow which might butterfly away a soviet Sino split of 1961-62. The Indians might react with more hostility when the Chinese forces took over Tibet in 1951 and the Tibetan uprising in 1959 would result in a war between India and china as the only buffer against them and the china is now gone and Indians would desire some distance from the communist power.
While benefits of a better relation with Pakistan for India is significant but it would not be so drastic that it would change the landscape of the country, however the benefits for Pakistan would be very dramatic as they would have access to the worlds largest market and would stand to benefit from the foreign investment and trade that India stands to receive as the world progress to globalization and Pakistan getting a free hand in Afghanistan be a bonus for the Pakistani establishment which might cause Afghanistan to go communist much earlier.
General Economic Trends from 1947-2020:
The early Phase : 1947-1973
This phase is characterized by heavy emphasis on agricultural reform and development with emphasis on light industrial development . With early land reforms combined with large scale investment in agricultural infrastructure, transportation especially rail network, expansion of banking services especially to the rural areas, electrification of the country side, setting up of educational institution for technical training, the country could be expected to be self sufficient in food by the early 1960s and begin to export grains by the mid 60s. Main Items of export would be grains, sugar, textile, tobacco, radio, television sets, low tech tools and machines to markets in the middle east and north Africa. Growth rates for the 1950s would be at 5 -6 percent, in the 60s and early 70s would be at 6-7 percent. In the absence of wars with Pakistan the country doesn't enter into recession.
The Build Up Phase: 1973-1997
The focus gradually shifts from agriculture to industry and infrastructure. Extensive rail network would be developed along with a network of roads and canals to aid the movement of goods and people. Industry centered around assembling components of various consumer goods expands and eventually the components themselves began to be manufactured in the country. Heavy industry too expands driven by foreign investments mainly from japan and the United states. From the 1980s the export market expands as globalization commences and the economy enters a phase of rapid growth. By the 1990 the GDP stands around 820 Billion dollars and is the 7th largest in the word. The 90s would be marked by double digit growth with domestic and international consumption taking off and the economy doubles in size in 7 years to 1.6 trillion dollars. Making the country the fourth largest in the world by exchange rate.
The Rapid Expansion Phase: 1997-2014
The focus remains industry and infrastructure. Manufacturing has developed to a high level of competence that the economy is in a position to produce almost any goods that is known to man although innovation in developing new goods or service or new technology is far from satisfactory. Country becomes a sweat shop of the world as country transitions to a export driven growth with growth level still at double digits. The communist Bloc collapses in the late 90s opening the eastern bloc nations to investment by the west and India too invests in the eastern bloc country's economies especially Russia's. Indians are accused by the Russians and Ukrainians of Theft of Intellectual property especially that relating to military technology an allegations which the united states notes with concern. The Indian Economy reaches 11 trillion by 2014 as the Indian Rupee gains strength against the US dollar. Investment in neighbors explodes as Indian manufacturers begin to search for cheaper labor force as the wages in India begin to increase as relatively low skilled jobs of assembling the goods are outsourced.
Consolidation Phase 2014- till present
The focus shifts from extensive development to an intensive one. Research and development is given a lot of emphasis. Indian Investment in Africa and Latin America increases so as to gain access to resources however no investment in industry takes place in these region as manufacturers stick to the Subcontinent or to south east Asian countries like Indonesia. Government spends more on welfare benefits than on infrastructure. Theft of Intellectual property remains a thorny issue between india and the USA. The economy would a Middle income economy where the average salary is around 8,000-10,000 dollars per year before taxes and deduction. The question of income and wealth in equality remains a hot political issue . A well paying job in india of this time line earns around 40,000- 120,000 dollars same as that of the western counter parts while salary of that of average factory worker ranges from 6,000-8000 dollars and this is not taking into account the income of the super wealthy.
